German business sentiment unexpectedly falls in December, Ifo survey finds
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People walk outside the department store Kaufhaus des Westens "KaDeWe" during Christmas season in Berlin, Germany, December 11, 2025. REUTERS/Lisi Niesner
By Maria Martinez
BERLIN, Dec 17 (Reuters) - German business morale unexpectedly fell in December, a survey showed on Wednesday, as Europe's largest economy continues to struggle to growth.
The Ifo institute said its business climate index fell to 87.6 this month from a slightly downwardly revised 88.0 in November. Analysts polled by Reuters had forecast a slight increase to 88.2.
"This year there are no presents for the German economy," said Klaus Wohlrabe, head of surveys at Ifo.
ECONOMY REMAINS STUCK IN STAGNATION
Germany has struggled to regain momentum this year, with only modest growth forecast following two years of contraction.
"For the German economy, the year has ended as it started: with a disappointing Ifo index reading," said Carsten Brzeski, global head of macro at ING.
The fall in the December Ifo chimes with the drop in the composite PMI and suggests a long-awaited economic recovery still has not materialised, with the government's fiscal stimulus plans not yet having a meaningful impact, said Franziska Palmas, senior Europe economist at Capital Economics.
"With part of the stimulus set to be used to cover the rising fiscal cost of ageing, and concrete plans for infrastructure investment taking time to materialise, we expect the boost from the fiscal stimulus to underwhelm," Palmas said.
Companies are looking more pessimistically at the first half of 2026, said Ifo's president Clemens Fuest.
The indicator for the current situation remained unchanged, with the year ending without any sense of optimism, added Fuest.
Chancellor Friedrich Merz promised an autumn of economic reforms to revive the economy.
"Business sentiment is suffering from the fact that, contrary to what the government announced, broad-based economic policy reforms did not materialize in the fall," said Joerg Kraemer, chief economist at Commerzbank.
(Reporting by Maria Martinez, Klaus Lauer, Miranda Murray and Ludwig Burger; Editing by Hugh Lawson)
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